Northern Nevada tourism could be in
serious trouble if local businesses and civic
leaders don't take quick action, warned
speakers at last week's Governor's
Conference on Tourism in Reno.
Industry speakers cautioned local leaders
about several threats, including tribal
casinos in neighboring states, and admonished
them for not having already done
something to reinvigorate northern
Nevada.
"Las Vegas reinvents itself every few
years," said Frank Fahrenkopf, president
and CEO of the American Gaming
Association in Washington, D.C. "I wish
you'd do that here in Reno. This area
hasn't done what it should. People in
northern Nevada say we don't want to be
Las Vegas. You're not. But I wish there
were more of that entrepreneurial spirit
here that's in southern Nevada."
Dr. William Eadington, professor of
economics and director, Institute for the
Study of Gaming, University of Nevada,
Reno, delivered a similar message. He said
Nevada-style entertainment is gaining in
popularity and the state has the advantage
critical mass over its competitors,including
legalized gaming in other states and on
Indian reservations.
On the positive side, Reno has made
substantial public sector improvements such
as the refurbished convention center and a
rejuvenated Truckee River, he said. But
gaming here continues to be weak, said
Eadington, and that's led to no new investments
in the area and a perception that
there's no reason for visitors to return once
they've seen it.
"The question is, will the patient survive?"
asked Eadington.
Eadington cited statistics showing that
gaming in Washoe County dropped in 21
of the last 24 months.
"That is pretty disturbing when you consider
that most of the Indian casinos in
northern California haven't been built yet,"
said Eadington.
Since Indian gaming was launched in
March 2000, California tribes have opened
45 casinos now generating $5 billion in revenues,
he said, already half the size of
Nevada's 70 year-old industry.
"California will exceed Nevada within 10
years," said Eadington.
Most of the new growth in California
Indian gaming will come in the northern
part of the state, said Anthony Miranda,
president of the Pechanga Development
Corp. and executive board secretary for the
California National Indian Gaming
Association.
Despite that, Miranda said Indian gaming
isn't a threat to Nevada.
"Can the tribes compete in the Nevada
market?" he asked. "I don't think so.Ours is
a local market.We don't have the density
you have. You have a tremendous advantage
in that."
But the local markets for northern
California tribal casinos consist of the visitors
that now travel to northern Nevada to
gamble.
In March, the California tribes are renegotiating
their compacts with the state, in
which they hope to raise the cap on the
number of slot machines each casino can
operate. Right now, the Indian casinos are
allowed 2,000 slots and Miranda said there's
been talk the limit may be upped to 5,000.
"Fighting the growth of Indian gaming
is a futile battle," said James Baum, corporate
director of development at Harrah's
Entertainment.
Harrah's strategy is to partner with the
tribal casinos, said Baum. The company
already has $400 million invested in Indian
gaming projects,including Harrah's Rincon
in San Diego, Harrah's Ak-Chin in
Phoenix,Harrah's Prairie Bend in Mayetta,
Kan., and Harrah's Cherokee in
Cherokee,N.C.
But Baum conceded that Indian gaming
is "a double-edged sword," for Harrah's.
Tribal casinos aren't the only gaming
threat to Nevada's tourism industry, warned
the gaming association's Fahrenkopf.
Racinos race tracks with slot
machines and/or video lottery terminals
constitute a booming business, he said.
Such operations are legal now in six states
Delaware, Iowa, Louisiana, New
Mexico, Rhode Island and West Virginia
and 10 other states are contemplating
legalizing them.
And there's potential for even more racinos
since pari-mutuel betting is legal in 43
states.
In 2001, racinos were a $2.1 billion business,
earning $578 million for local and
state governments.Taxes generated by three
racinos in Iowa, for example, represent 2
percent of that state's budget, said
Fahrenkopf. In West Virginia, which has
four racinos, the operations' taxes make up
10 percent of that state's budget. In
Delaware, three racinos bring in 8 percent
of the state's budget.
And racinos have garnered the attention
of Harrah's Entertainment, Park Place
Entertainment, Boyd Gaming Corp. and
Penn National Gaming, all of which have
investments in various tracks.
At the conference, state representatives
and tourism officials said they are working
hard to expand Nevada's appeal beyond
gaming.
"Help us carry the message of the repositioning
of this area," said Jeff Beckelman,
president and CEO, Reno-Sparks
Convention and Visitors Authority. "There
is an abundance of recreational opportunities
here, including gaming."
The primary emphasis is on sports and
outdoor recreation through a campaign to
promote the state as an adventures destination.
To that end, the biggest event of the
conference was the announcement that the
ESPN Great Outdoors game will be held
in Reno in 2003. (See story, page 3).
"The adventure campaign was a bold,
risky move," said Lt. Gov. Lorraine Hunt.
"Now we're finally marketing the state as a
whole. Nevada is the only place you can
come and have myriad adventures."
Another avenue is international tourism.
"The international market is going to be
key," said Hunt, who went on a tourism
promotion trip to China in March. "China
is going to be our next market. It's
untapped and there are literally millions [of
potential tourists] there."
William Norman, president and CEO
of Travel Industry of America, agreed.
"Eighty percent of Americans already
travel," said Norman. "Where will the
growth come from? International."
But international travel is down,
although it is expected to rebound, and it
almost exclusively benefits Las Vegas.
International travel to the U.S. had its
biggest decline ever last year, from about 50
million in 2000 to just under 46 million in
2001, said Dave Averne, tourism development
with the U.S. Commerce
Department. And dollars spent by foreign
visitors dropped from $103 billion to $91
billion.
"But ninety-one billion is still a huge
chunk of change," said Averne.
The Commerce Department expects
international travel to make a comeback,
and grow 32 percent between 2001 and
2006.
International visitors spent $2.9 billion
in Nevada in 2000, the last year for which
the Commerce Department has numbers.
About 42 percent of those tourists come
from Asia/Pacific and a third arrive from
Europe.
But most depart in Las Vegas, and never
travel to northern Nevada. For one, the
average stay is 3.7 days, too short for most
travelers to do much more than visit Las
Vegas, said Jo-Anna Palmer, account manager,
Gate 7 Pty. Ltd. in Sydney, Australia.
Japanese visitors, for one, might come for
skiing, said Kyosuke Okada, president,
Okada Associates in Tokyo, but Canada
offers very competitive ski packages that are
hard to beat.
Sonia Sook Ny Hu Hong, who promotes
Nevada tourism in South Koreas as
managing director of International Tourism
Network in Seoul, did say northern
Nevada's efforts to reposition the area as an
outdoor playground were on the right track.
"I'm really glad Nevada took on an
adventure campaign," said Hong. "It will
help push into Reno because Las Vegas has
all the gambling."
